Court action against Hershey is pulled

The campus of the Milton Hershey School. A former board member, Robert Reese, said in his suit that the charity spent money on things it should not have, such as a golf course.
The campus of the Milton Hershey School. A former board member, Robert Reese, said in his suit that the charity spent money on things it should not have, such as a golf course.
Posted: April 05, 2011

Just as the legal battle was heating up, a former insider at the multibillion-dollar Hershey charity has withdrawn his court action that claimed the misuse of millions of dollars meant for educating poor children.

Robert Reese, a former Hershey trustee and president of the Hershey Trust Co., took the action Monday, saying deteriorating eyesight made it impossible for him to pursue the case. He added that he believed the Attorney General's Office would investigate his claims, which were filed Feb. 8 in Dauphin County Orphans Court.

The charity said in a statement that Reese's action ended "unnecessary litigation." Separately, the charity asked in the last week for the Dauphin County Orphans Court to dismiss Reese's petition.

In those filings, the Milton Hershey School and the Hershey Trust Co. said that Reese was being vindictive because he was not reelected to the charity's boards in February and that the proper agency to investigate his claims was the Attorney General's Office.

The Hershey organization includes the candy company, the Hershey Entertainment & Resorts Co., and the Hershey Trust, which operates and finances the Hershey School, the nation's largest residential school for impoverished children. The $7.5 billion Hershey charity was founded by chocolate king Milton Hershey and his wife, Catherine.

The Hershey Trust and the school also said in the court filings that Reese did not have legal standing to take his claims to court and that he participated in the financial decisions he was now criticizing, including those over directors fees.

The legal fight over Reese's petition was shaping up to be hugely expensive for Reese personally, as well as the charity.

Hundreds of pages of documents have been filed in the last week, and 16 lawyers are named in the documents as representing the trust or its leaders. Among the lawyers representing the charity are Arthur Makadon, the chairman of the politically connected Ballard Spahr L.L.P. firm in Philadelphia, and John Estey, a chief of staff for former Gov. Ed Rendell, who also is with Ballard Spahr.

Reese's attorneys had been Margaret E.W. Sager and Bradley D. Terebelo of Heckscher, Teillon, Terrill & Sager P.C. in West Conshohocken, a boutique law firm that deals with trusts.

"Since filing my Petition on February 8th, my serious pre-existing vision problems have gotten much worse, causing rapid deterioration of my vision over the last few weeks. This has made it physically impossible for me to undertake the reading and work required to continue the case," Reese said in a statement.

Hershey Trust and the Hershey School said Monday that Reese's action "further supports our conviction that the facts demonstrate we have consistently acted with the best interests of the school in mind and in accordance with the principles of Mr. Hershey's deed of trust."

In addition, the charity said, "we maintain our belief that the ongoing review by the Charitable Trusts and Organizations Section of the Attorney General's Office is the appropriate forum for addressing these matters, and we will continue to cooperate fully with that review."

In October, the attorney general disclosed an investigation into the charity's 2006 purchase of the $12 million Wren Dale Golf Club, a property that the charity's own appraisal said was worth about $4 million as a golf course or $6 million as a site for a housing development.

The charity then built a $5 million clubhouse on the golf course with funds from the Hershey School and opened the facility to the public. The school has said the land was for future expansion and as "buffer land" for student safety.

The golf course expenditure was one of the claims in Reese's petition. The charity said in its filings last week that Reese did not participate in the purchase of the golf course but that he consented to the construction of the clubhouse.

The attorney general's investigation followed a series of reports in The Inquirer detailing questionable expenditures by the Hershey charity - funds meant to be spent directly on the school and its disadvantaged students.

The charity is headed by LeRoy S. Zimmerman, one of the state's most powerful Republicans and a former two-term attorney general.

Zimmerman is a friend and political ally of Gov. Corbett, who served as attorney general from 2005 until he was sworn in as governor in January.

According to the charity's latest tax filing with the Internal Revenue Service, Zimmerman earned $500,000 in directors fees on Hershey-related boards in 2009. Zimmerman has said he will not stand for reelection to the board of the Hershey chocolate company this month, which will reduce his compensation about $200,000 a year.

Nils Frederiksen, spokesman for the Attorney General's Office, said the investigation into the Hershey charity was continuing. "We have a duty to investigate any allegations that are raised, and that's something we follow through on."

There was no timetable for concluding the investigation, he said.


Contact staff writer Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com.

 

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